Litgas secures bank guarantees for LNG cargo payments

Litgas, part of the Lithuanian state-controlled Lietuvos Energija, on Monday said it has signed two letters of credit agreement totaling €154.7 million with SEB and Swedbank.

The two deals are a guarantee to that Litgas would complete its payments to LNG suppliers, a company statement reveals.

Vytautas Čekanavičius, Litgas acting CEO said that due to the high value of LNG cargoes, the suppliers are wary of the buyers’ credibility and financial capacity and are looking for bank guarantees in return.

In its agreement with Skandinaviska Enskilda Banken (SEB), a Swedish financial group, Litgas secured a €84.7 million letter of credit agreement valid until the end of 2024.

The agreement with Swedbank Litgas secured €70 million valid for three years.

Lithuania recently renegotiated its LNG supply deal with Statoil cutting the price by 15-20 percent and extending the term from five to 10 years while the volume increased from 2.7 billion cubic meters to 3.7 bcm.

Until recently, LItgas was the sole importer of LNG via the FSRU Independence in the port of Klaipeda, however, as of February imported volumes are split between Litgas, Lietuvos Duju Tiekimas, and Lithuanian fertilizer producer Achema.